[Federal Register Volume 60, Number 132 (Tuesday, July 11, 1995)]
[Notices]
[Pages 35771-35773]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-16931]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35925; File No. SR-PHLX-95-35]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 to the Proposed Rule Change by the
Philadelphia Stock Exchange, Inc., Relating to the Routing and Delivery
of Broker-Dealer Orders in USTOP 100 Index Options Through the
Automated Options Market System
June 30, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on May 22,
1995, the Philadelphia Stock Exchange, Inc. (``PHLX'' or ``Exchange'')
filed with the Securities and Exchange Commission (``SEC'' or
``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the self-regulatory
organization.\1\ The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
\1\ The PHLX amended its proposal to limit the scope of the
proposed rule change to one index option, the USTOP 100 Index
(``TPX''). See Letter from Gerald D. O'Connell, First Vice
President, Market Regulation and Trading Operations, PHLX, to
Michael Walinskas, Branch Chief, Office of Market Supervision,
Division of Market Regulation, Commission, dated June 14, 1995
(``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Currently, only public customer orders are eligible for delivery
through
[[Page 35772]]
the Automated Options Market (``AUTOM'') system, the PHLX's electronic
order routing and delivery system for equity and index options. The
PHLX proposes to amend its rules to allow the orders of PHLX member and
non-member broker-dealers in USTOP 100 Index (``TPX'') options to be
routed and delivered through AUTOM and executed manually. The broker-
dealer TPX options orders will not be eligible for AUTO-X, the
automatic execution feature of AUTOM.
The text of the proposed rule change is available at the Office of
the Secretary, PHLX, and at the Commission.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections (A), (B), and (C) below,
of the most significant aspects of such statements.
(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
The purpose of the proposal is to permit TPX orders for the
accounts of broker-dealers to be delivered through AUTOM. AUTOM, which
has operated on a pilot basis since 1988 and was most recently extended
through December 31, 1995,\2\ is an on-line system that allows
electronic delivery of options orders from member firms directly to the
appropriate specialist on the Exchange's trading floor. Currently,
public customer orders for up to 500 options contracts are eligible for
AUTOM \3\ and public customer orders for up to 25 contracts, in
general, are eligible for AUTO-X,\4\ the automatic execution feature of
AUTOM.\5\ AUTO-X orders are executed automatically at the disseminated
quotation price on the Exchange and reported to the originating firm.
Orders that are not eligible for AUTO-X are handled manually by the
specialist. Under the proposal, broker-dealer TPX option orders will
not be eligible for AUTO-X.
\2\ See Securities Exchange Act Release No. 35183 (December 30,
1994), 60 FR 2420 (January 9, 1995) (order approving File No. SR-
PHLX-94-41). See also Securities Exchange Act Release Nos. 25540
(March 31, 1988), 53 FR 11390 (order approving AUTOM on a pilot
basis); 25868 (June 30, 1988), 53 FR 25563 (order approving File No.
SR-PHLX-88-22, extending pilot through December 31, 1988); 26354
(December 13, 1988), 53 FR 51185 (order approving File No. SR-PHLX-
88-33, extending pilot program through June 30, 1989); 26522
(February 3, 1989), 54 FR 6465 (order approving File No. SR-PHLX-89-
1, extending pilot through December 31, 1989); 27599 (January 9,
1990), 55 FR 1751 (order approving File No. SR-PHLX-89-03, extending
pilot through June 30, 1990); 28625 (July 26, 1990), 55 FR 31274
(order approving File No. SR-PHLX-90-16, extending pilot through
December 31, 1990); 28978 (March 15, 1991), 56 FR 12050 (order
approving File No. SR-PHLX-90-34), extending pilot through December
31, 1991); 29662 (September 9, 1991), 56 FR 46816 (order approving
File No. SR-PHLX-91-31, permitting AUTO-X orders up to 20 contracts
in Duracell options only); 29782 (October 3, 1991), 56 FR 55146
(order approving File No. SR-PHLX-91-33, permitting AUTO-X for all
strike prices and expiration months); 29837 (October 18, 1991), 56
FR 36496 (order approving File No. SR-PHLX-90-03, extending pilot
through December 31, 1993); 32906 (September 15, 1993), 58 FR 15168
(order approving File No. SR-PHLX-92-38, permitting AUTO-X orders up
to 25 contracts in all options); and 33405 (December 30, 1993), 59
FR 790 (order approving File No. SR-PHLX-93-57, extending pilot
through December 31, 1994).
\3\ See Securities Exchange Act Release No. 35782 (May 30,
1995), 60 FR 30136 (File No. SR-PHLX-95-30).
\4\ Recently, the Commission approved a proposal increasing the
maximum number of public customer orders in USTOP 100 Index options
that are eligible for AUTO-X from 25 to 50 contracts. See Securities
Exchange Act Release No. 35781 (May 30, 1995) (order approving File
No. SR-PHLX-95-29).
\5\ The Commission has approved a PHLX proposal to codify the
use of AUTOM and AUTO-X for index options. See Securities Exchange
Act Release No. 34920 (October 31, 1994), 59 FR 5510 (November 7,
1994) (order approving File No. SR-PHLX-94-40). In addition, the
Commission has approved a PHLX proposal to codify the Exchange's
practice of accepting certain order for AUTOM and AUTO-X. See
Securities Exchange Act Release No. 35601 (April 13, 1995), 60 FR
19616 (April 19, 1995) (order approving File No. SR-PHLX-95-18).
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At this time, the PHLX proposes to permit broker-dealer TPX option
orders to avail upon the Exchange's AUTOM system. The PHLX believes
that extending AUTOM to broker-dealer TPX option orders will allow
additional orders to benefit from AUTOM's prompt and efficient
electronic order delivery and reporting. This, in turn, should add
liquidity to the PHLX's marketplace for TPX options by encouraging
broker-dealer orders who seek such automated order treatment. As noted
above, AUTO-X will not be available for broker-dealer TPX orders; all
such broker-dealer TPX orders will be handled manually by the
specialist.
For these reasons, the PHLX believes that the proposal is
consistent with Section 6(b) of the Act, in general, and, in
particular, with Section 6(b)(5), in that it is designed to promote
just and equitable principles of trade and to protect investors and the
public interest by extending the benefits of AUTOM to broker-dealer
accounts.
(B) Self-Regulatory Organization's Statement on Burden on Competition
The PHLX does not believe that the proposed rule change will impose
any inappropriate burden on competition.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reason for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(a) By order approve such proposed rule change, or
(b) Institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying at the
Commission's Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. Copies of such filing will also be available for
inspection and copying at the principal office of the above-mentioned
self-regulatory organization. All submissions should refer to the file
number in the caption above and should be submitted by August 1, 1995.
[[Page 35773]]
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
\6\ 17 CFR 200.30-3(a)(12) (1994).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-16931 Filed 7-10-95; 8:45 am]
BILLING CODE 8010-01-M
